Mark Donohue - Vice President, Investor Relations and Corporate Communications Fred Wilkinson - President and CEO Bryan Reasons - Chief Financial Officer Mike Nestor - President, Brand Division.

David Amsellem - Piper Jaffray Sumant Kulkarni - Bank of America Louise Chen - Guggenheim Gregg Gilbert - Deutsche Bank Elliot Wilbur - Needham & Company Gary Nachman - Goldman Sachs Jason Gerberry - Leerink Partners Michael Faerm - Wells Fargo Marc Goodman - UBS Austin Nelson - Sterne, Agee.

Good morning. My name is Kavita, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Impax Fourth Quarter and Full Year 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session.

[Operator Instructions] Thank you. Mr. Donohue. Please go ahead..

Thanks, Kavita. Good morning, everyone. Welcome to our Impax’s fourth quarter 2014 financial results conference call. We issued our earnings release this morning, a copy of the press release and link to the webcast of this call are available on the company’s website at www.impaxlabs.com.

Today, President and Chief Executive Officer, Fred Wilkinson, will provide an overview of the fourth quarter and some of the recent events. Then Bryan Reasons, our Chief Financial Officer, will provide additional details on the financial results. Also joining us for the question-and-answer session is Mike Nestor, President of the Brand Division.

Our discussion today may include certain forward-looking statements and actual results may differ from those presented here. The factors that could cause such difference are outlined in our SEC filings and on our website. Our discussion today includes certain non-GAAP measures as defined by the SEC.

Management uses both GAAP financial measures and the disclosed non-GAAP financial measures internally to evaluate and manage the company’s operations and to better understand its business.

Further, management believes the inclusion of non-GAAP financial measures provide meaningful supplementary information too and facilitates analysis by investors in evaluating the company’s financial performance, results of operations and trends.

A reconciliation of GAAP to non-GAAP measures is available in our fourth quarter 2014 earnings release, which can be found on the company’s website. With that, I will turn the call over to Fred..

Good morning, everybody, and thank you for joining us on this call. In 2014 we executed on our strategic and operational objectives, this were all design to enhance our long-term growth potential. This morning’s earnings release highlighted our continued company success as we delivered another solid quarter and what was a strong year for Impax.

Bryan will discuss the financial results in more detail, but I want to highlight that our brand and generic business unit continued to do an outstanding job of maximizing the opportunities from our product portfolio. We delivered revenue growth of 30% for the fourth quarter and 70% for the full year of 2014.

This result is a significant improvement in fourth quarter and full year adjusted EBITDA and EPS compared to 2013. Over the past years we focused on four core areas to drive improvement and growth across the company.

This included focusing on quality, maximizing our brand and generic commercial opportunities, optimizing our R&D expertise and executing on business development opportunities. We benefited last year from the actions we took across these focused areas and they will continue to be the areas of focus for 2015.

On the quality front, we've been very intensely focused on continuing the implementation of the cross company Quality Improvement Programs that will service our foundation for years to come. We’ve talked about this program many times on many calls and at all the conferences.

It’s designed to help the company stay ahead of all the regulatory issues and keep us on track for the compliance status in all our facilities. In 2014, we spent slightly less than $24 million on remediation and remediation related quality improvements.

We expect spending to be significantly less in 2015 as we continue to transition from a consultant base remediation to employee base sustainable QIP program.

While we will continue to work closely with FDA, we don't have any update at this time on the formal regulatory status in Hayward nor do we have an update for receiving new approvals from this facility. As I mentioned earlier, our commercial teams delivered strong results in 2014.

They are excited about our product -- that our product portfolio will expand in 2015 as a result of the January approval of RYTARY and the addition of 11 currently marketed generic and four branded products that will pickup following the -- the completion of the proposed acquisition of Tower Holdings.

As presented earlier this year, the company has successfully diversified our business model and is anticipating as many as 17 potential generic launches in 2015 across Impax, CorePharma and the external partnership -- relationships that both companies have. As you can see, we expect this to be a very, very busy year.

The brand sales organization is anxious to start promoting RYTARY once they have completed their sales training in late March. The growth of Zomig nasal spray experience in 2014 is continuing into first quarter and sets the foundation for a strong start.

By the end of December 2014, they reached all-time high in volume and share, and established Zomig nasal spray as the number one prescribed branded nasal spray for the treatment of migraines. So what’s happened since RYTARY was approved in early January. At the J.P. Morgan Investor Conference in mid-January, we highlighted our launch plan.

So to recap, RYTARY will be launched into phases. On February 10th we initiated the first phase by shipping product to Detroit and by supplying samples to the 100 -- to approximately 100 movement disorder specialists that participated in clinical trials. So these physicians can begin initiating use of the product.

We also recently held training for our speakers bureau and initiated online marketing and retail print advertising. We are preparing for the second phase following completion of the training of or sales reps.

In -- our 77 representatives we will commence detailing at the end of March to the 8,100 targeted neurologists who write about 85% of prescriptions. Our primary focus is going to be on those patients who are currently on levodopa-carbidopa.

We will spend about $13 million in marketing -- marketing money, much of which will be heavily invested in samples in the 2015 timeframe. Another area where we made enhancements in 2014 was across the brand and generic R&D organizations. In October, we reorganized and optimized our brand and generic programs.

We use this opportunity to take the core competencies of our generic team to help the brand group and the competencies of the brand group to help generics. The generics team will be doing most of the early stage work. The brand group will carry-out any clinical work that requires endpoint studies.

We also reorganized and restructured our R&D portfolio and reduce the numbers of ANDAs sitting in front of FDA to approximately 22.

We also spent time reviewing products under development focusing on making sure that we’ve got the right products in our portfolio and we are spending the right monies on this assets and that we were looking at those that have more sustainable revenue opportunities than others.

We are now targeting a very select group of 22 products that are now at various stages of developments. On the brand side, we have -- we are involved in -- evolving a portfolio with the focus on more late stage projects. And we think that that these projects will be launchable and will have revenue opportunities in the next three to five years.

The fourth area of our focus is M&A and business development. As most of you know, the company has a very healthy balance sheet for number of years with over $400 million in cash and no debt. We identified late last year a strategic and financial attractive asset Tower Holdings and Lineage Therapeutics, which we call collectively CorePharma.

This specialty company is a very nice fit to our existing business. Since announcing the deal in early October of ‘14, we've been highlighting many of the benefits of this acquisition.

We will significantly increase our revenue and earnings in 2015 and we’ll expand our currently marketed brand and generic portfolio, expense our development product portfolios and R&D efforts and provide additional manufacturing and supply chain operations. We anticipate receiving FTC clearance shortly and will close promptly afterwards.

We are currently planning to issue full year 2015 combined company guidance as we move closer to this close. This acquisition is our first M&A transaction in a while but we intend to keep going.

We have a net well -- we will have a net leverage ratio of approximately 1.5 times leaving plenty of capacity to continue to expense for M&A and business development. These efforts will include to pursue additional brand and generic products as well as brand and generic companies.

On the generic side, we are looking at opportunities to expand our oral solid and alternative dosage form portfolio and on the brand side, we are pursuing opportunities in the CNS base, including currently marketed and late-stage pipeline assets. So in closing, we continue to be excited about our future and the opportunities that lay ahead.

And we look forward to sharing our progress with you in future calls and in the upcoming conferences. Thanks for joining us. And I’ll turn it over to Bryan to review the financial highlights..

Thanks, Fred. Good morning, everyone. As Fred mentioned, we finished 2014 with another good quarter in what was a very good year as we took a number of steps to accelerate our evolution into a larger and more diversified specialty pharmaceutical company. Our total revenues in the fourth quarter increased $30 million or 30% to $131 million.

Driving this increase was higher generic sales of Adderall XR, Digoxin and Solaraze Gel. Total revenues in last year’s fourth quarter were negatively impacted by $19 million charge resulting from customer credits earned from higher contract pricing on certain generic products that triggered clauses in our wholesaler agreements.

We realize the higher pricing during 2014. Our adjusted gross margins in the fourth quarter 2014 increased to 51% from approximately 45% due to higher sales of the products previously mentioned. Moving onto our operating expenses.

Adjusted research and development expenses in the fourth quarter were lower by approximately $2 million primarily due to the R&D reorganization we announced in October. As previously announced, we expect to realize approximately $8 million of annualized cost savings as a result of this reorganization.

The cost savings are the result of a net reduction of approximately 49 positions or about 25% of the combined brand and generic R&D organizations. Fourth quarter 2014 patent litigation expense continue to decline down approximately $3 million due to the timing of legal activity related to several cases.

The declines in R&D and patent litigation expenses in the fourth quarter were offset by higher SG&A expenses. Our fourth quarter 2014 adjusted SG&A expense increased by approximately $6 million.

This is primarily driven by higher executive transition charges, increased advertising and promotion of Zomig nasal spray, pre-launch support spending of RYTARY and higher legal cost.

Our adjusted fourth quarter SG&A excludes $2.7 million related to severance expenses, associated with a reduction in force -- workforce in October and $3.9 million of business development expenses. During the fourth quarter, we had a couple events negatively impact our fourth quarter and full year effective tax rate.

We incurred foreign losses as a result of expenses associated with the accelerated EMA filing of RYTARY and the effort to find an ex-U.S. commercial partner. These costs were incurred in a zero rate tax jurisdiction so there was no tax benefit. We expect to realize tax benefits in the future once commercial payment from an ex-U.S.

partner can be recognized in the lower tax jurisdiction. During the fourth quarter, we reduced generic product manufacturing in Taiwan in preparation for the manufacturing of RYTARY. This resulted in a reduction of income taxed in the lower tax Taiwan jurisdiction.

Our higher fourth quarter revenues resulted in our adjusted earnings per share increasing to $0.16, compared to a loss of $0.02 last year. For 2014, we invested $30 million in CapEx, about $5 million less than our full year guidance. This is primarily due to delay in new projects pending.

We ended 2014 with $450 million in cash and short-term investments. As previously announced, we intend to fund the proposed acquisition of Tower Holdings through a combination of cash on hand and a new $435 million term loan. With commitments on the loans completed and look forward to closing the transaction after we receive FTC approval.

Thanks for your attention. And I will now turn the call back to Kavita for questions..

[Operator Instructions] The first question comes from line of David Amsellem with Piper Jaffray..

Good morning, Dave..

Good morning. So just a couple of -- so on RYTARY, can you walk us through the portion of the addressable population that’s Medicare Part D versus covered by commercial payors and are you expecting significant step-edit for patients after you’ve had been on CNS for some period before getting access to the drug, so that’s number one.

And then just on the M&A front, I guess the question here is how are you thinking about the number of additional CNS products? What do you think the sales force needs in order to be at total capacity and would you contemplate bringing acquisitions in the CNS space that would require significant sales force expansion? Thanks..

I’m going to let, Michael hand the RYT, but give him a little commercial before he starts. They’ve done an outstanding job of starting to lay the groundwork on the managed care, the total managed care coverage front with three, four of the major plans that have already published that they will be covering the product.

I think there is probably another dozen and a half who are in the process of it but maybe might Mike can walk through that differentiation in D and commercial?.

Sure. Thanks, Fred. Hi, David. So to your question about the split relative to Part D and commercial, it’s round about 52% is Part D and the balance is commercial of which I think about 2% is Medicaid. So that's generally how we look at it to Fred’s point.

Right now, I think there is about $30 million covered lives that have been imitated on their respective plans at RYTARY, will be covered and there is a number who have indicated to us that they will certainly be covering it. They just haven’t put the notation on their firm’s website at this point.

We’ve contacted probably at this point, 8 out of 10 of the top Part D coverage plans and given presentations to them. As you know, they can take a little bit longer to make the determination from a coverage perspective. But we are at least pleased with the reception that we are getting to the RYTARY stores.

As to step-edits, mostly what we're hearing from the plans is that RYTARY will be covered potentially say Tier 2, many Tier 3s.

And what we would anticipate from a step-edit standpoint and it’s also part of the overall approach relative to RYTARY is these patients will be switched from immediate release carbidopa-levodopa anyway because the patients that we anticipate first being assigned to RYTARY will be those who are fluctuated on immediate release carbidopa-levodopa, meaning that they don't have the control that they used to have and physicians are looking to either increase the dose frequency or increase the amount of product that is given for each dose.

And I think -- so hopefully I’ve answered that aspect for you pretty well. I think the other question you had was relative to other CNS products and I will let Fred answer..

Let me jump in. I mean, obviously this has been a focus. We’ve -- philosophy that we’ve described is aiming at those disease areas that our neurologists spend most of their time on that would be movement disorders like Parkinson’s disease, migraine, which we have Zomig for, looking at epilepsy, looking at multiple sclerosis and looking at pain.

So those are areas that are of keen focus to us. There are assets that are purchasable out there. There are companies that have those assets within their portfolio.

And I think we’ve probably been engaged with almost everybody, who is participating in this, and in cases trying to extract, in other cases just trying to work through some of the programs and processes that they have to maximize the products that they are developing. So stay tune. We never really talk about projects until they are completed.

So hopefully, we will be having some announcements in the near future. All of them will be aimed at later stage or commercially available products, as we think that we are at the size of and stage of our growth that those would be meaningful assets to purchase..

Does that include sales force expansion?.

It would depend if you are staying within the movement disorder area or the migraine area, most likely not. But if you move outside that, that will be subspecialties in the neurology area that you have to expand to. But again the revenue it supports any kind of growth it will take.

We are actually planning a sales force expansion at least on the books at the end of this year based on RYTARY and Zomig success..

Yeah. So right now David, we are going from 64 to 77 and most of those folks now have accepted positions with the company. They begin training next week prior to our launch meeting at the end of March. And as Fred said, we do already have plans at the end of the year to look to a further increase that we think is very consistent with our footprint..

Okay. Thanks, guys..

Sure..

Your next question comes from the line of Sumant Kulkarni with Bank of America..

Good morning..

Good morning..

Just few on RYTARY. So you mentioned that you might be expanding the sales force again.

If I remember right, the number that was given in the past was about 140 sales reps, do you still plan to get to that number, or could it be something lower than that?.

Yeah. I think we probably said we are going to launch 77 and we may expand to size around 100. That would be based on again meeting certain parameters on RYTARY launch and some parameters on managed care covered and on continuing growth of Zomig, a nasal spray. But it would be dollars that you would anticipate us spending in 2016..

And Mike you mentioned that some of the addressable patients might be switched over at, so at any given point in time roughly how much of the Parkinson’s disease patient population is switchable to an extended-release formulation?.

I think Sumant the way you got to look at it is that the percent of patients that are in the early -- what they consider the early stage of the disease where they’re fairly well controlled by immediate-release carbidopa-levodopa and then you start to look at kind of the moderate to advanced type patients, which constitute about two-thirds of the patient population.

So we are more focused on that two-thirds portion of the patient population at least initially, okay..

Yeah. How close are you to ex-U.S.

partnering on this asset?.

Yeah. So let me address that. I mean, we’ve talked about that at JPM. We went wide. We’ve reinitiated our program back in October when we could see manufacturing plan and we could see what we needed to do in Taiwan to make sure it would be available both in the U.S. and ex-U.S. We’ve narrowed that field and gone into the second stage of diligence.

We are down to a handful of candidates. We do have projected. We do expect to close the deal sometime in the first half of 2015..

Got it.

And my last one is though on the specific generic product, the old version of generic CONCERTA, independent of warning letter issues, have you done the necessary work that might be required to get an approval in this new kind of FDA regime?.

Yeah. So we have evaluated our project. As you remember, we have a partnership with Teva on this particular asset. We have evaluated our -- the results of our work based on the new guidance. We do not believe that we will be able to meet these specifications. We are in discussions with our partner as to what we do next.

And I think we’ll probably go behind closed doors and finally not to talk about this anymore, since it’s an asset that we had talked about because it was litigation around it that will no longer be the case. And I think we’ll just kind of walk away until we can get done with the asset.

But we don’t meet the specs right now but we are evaluating what the next plan would be..

Thanks, Fred..

Your next question comes from line of Louise Chen of Guggenheim..

Thank you for taking my questions. I had a few. First question I had was on RYTARY, what kind of launch trajectory are you expecting for this? Is it going to be a fast or slow? And how we should think about that? And then secondly, with respect to the partnership outside the U.S., what would you do if somebody wanted U.S.

rights as well, like how would you think about that negotiation? And then on SG&A spending just curious how we should think about it year-over-year? I think you gave some broad strokes, some additional sales reps, some marketing cost, I know you not giving guidance, but what can you do to help us model that correctly for ‘15? Thanks..

So the trajectory I think will look like many of the specialty product launches that you’ve seen in the last 12 to 18 months. A little bit slow initially. I mean right now, we've got samples in front of the 100 plus movement disorder specialists that are out there that have been involved in a clinical program.

So you prior won’t see virtually any script generation from that because of the utilizing samples. Reps don't hit the street until beginning of April. So when they come out of the training program, they will also be equipped with samples as well as starter programs. We do anticipate that it will go slowly but trajectory to climb.

I’ve always kind of guided that the right way to measure this product is sometime in the end of 2Q when you're starting to see now a bit of a steady state in the growth curve. And it will be -- you’ll see most of prescriptions coming out of neurologist and probably a great majority coming out of the movement disorders specialist themselves.

As far as outside the United States, this has been a great discussion that we've had. Almost anybody who would be -- have the capabilities of doing the entire world will also want the U.S. We’ve engaged in discussions with parties to see how they might assist us with the U.S. activities.

We haven't found anybody that could come with the right parameters on that, so that our anticipation is that we will have at least one partner to handle the majority of the territories outside the United States and we may need to supplement with some secondary partners who would handle the unique environment like Far East or possibly Latin America.

But we do not intend at this particular time and haven't seen anybody come forward with an overture that would make us change our view on commercializing this product ourselves in the United States. And as far as SG&A guidance, we see that questions….

I’m happy to jump in there. So like I mentioned, a couple things driving SG&A in the fourth quarter, we had significant business development activity. We’re also putting a lot of work on pre-closing integration activity to ensure that the post-close integration of Core goes smoothly. So it’s been a lot of work going on there.

We’ve talked about the couple of the legal suits that we've been working on that drove cost. We’ve also had in the fourth quarter some accelerated IT work particularly, related to the QIP program. So all those were in kind of the corporate SG&A bucket.

Like I mentioned earlier, in the fourth quarter, we did a lot of advertising and marketing on Zomig as well as some quite a bit of prelaunch RYTARY type activity, so that all drove higher SG&A in the fourth quarter.

And you guys can -- some of things are maybe nonrecurring, some maybe are not but we’ll give additional combined company guidance as we near the close of the Core transaction..

Thanks.

Can I just squeeze one more really quickly in just on RENVELA when we think about that year-over-year in terms of sales, how should we think about ‘14 versus ‘15?.

Well, RENVELA, I would say we are extremely delighted that that transaction was completed to allow us to put about $80 million of revenue and EBITDA on the sheet by marketing the product supply. Last year, as you saw, we’ve been past September with no approvals. I mean, it’s now February, heading into March, still no approval.

This looks like a difficult product for our side of the industry to get out. We are still working very actively on adjudicating our ANDA. Hope to be at the first phase of launch. And I think as you talk to my brother and I’ll say you’ll find that there is really nobody that is able to give much of a prediction on RENVELA, if they are willing to.

But it worked out six months past the time when the generic should have been there..

Thank you..

Our next question comes from the line of Gregg Gilbert with Deutsche Bank..

Hi. Good morning, guys..

Good morning, Gregg..

First question is a broad one about your ANDA pipeline.

Can you -- maybe you don’t have this top of mind but can you talk about how many of those ANDAs on file, addressed brands that don’t yet have generic competition, trying to understand the flavor of where you are trying to be first to market or among the first to market versus kind of back filling a portfolio and then, I have a couple of follow-ups?.

So, we haven’t publicly released that yet, but you can see by the fact that we’ve refreshed our portfolio. So, we’ve taken this down from something like 45 or 46 projects that were on the dock before to right around 22.

We hope as fast, some of those grew stale, some of them, the file wasn’t as technically solid as we would like it to be as the agency reviews each one of these and others, we just looked at and said, we’d rather have more of that we could make out -- we could be there when the markets to be made.

The majority of those, we think we have a possibility of being there when a market is established. But we’ve not released any data on numbers of first to files yet. I think we are going to start doing that once we start getting the other side of core and we can take their R&D program or an RNA program and combine those.

I think it doesn't really -- doesn’t help you a lot right now. I think it's more valuable once we get to the other side of the close..

Okay. And then regardless to when those 4,000 applications or whatever they get circles down to -- comes to market in the U.S., the generic business in the U.S. is going to get more competitive and not just for ortho but all types of products.

So, Fred, what do you think as you look at three to five years, are the elements of the Impax strategy that most need to be either added, or bulked up? I assume you will agree that the U.S. generic environment is going to become more competitive over time.

So what you think those missing elements are over time at Impax?.

Yeah. Still lots of shots on goal, I mean, there are still lot of products that are available to us and so a lot of oral solids. You can see we've expanded two alternative dosage forms to some respect with our relationship with TOLMAR. There’s about a dozen products that are in development that are topicals.

We've evaluated the injectable space, just haven’t found the right opportunity to jump into that and still value any whether that market will stay healthier, whether it will go back to its previous commodity status, the end run at some point is biosimilars. We’ve stayed away from that.

I don’t think that’s appropriate for us to jump into that fray right now. But inevitably some time over the lifecycle you’re going to have to get there. And I think the idea is that our portfolio is really aiming at is alternative dosage forms and oral solids of that.

The technology itself is difficult, now that you can be one-o-one, to one-o-three into the marketplace.

I mean look, I think WELCHOL and RENVELA are good example as well as CONCERTA, are good examples of products that everyone would've thought probably there would be competition on and those markets are changing dramatically based on some of the new regulations.

So, we continue to participate in those and we will and hopefully, the technology foundation that we have will help us be viable participant in those..

And lastly, Fred, when you were newer at Impax, you stuck your neck out and predicted a significant deal by year end, do you care to freshen up any predictions for 2015?.

Well, I did announce a deal before year end. We are just in the process of trying to close it. We are pretty active right now. There are several assets that people know about that we are in the fray on and there is others that we are trying to extract out of company.

So, I would hope that we would be making announcements at least around the same time we did last year if not earlier. So, we are going to stay very, very active in this space and I think our balance sheet supports that..

Thank you..

…our financial position, that helps..

Appreciate the color. Thanks..

The next question comes from the line of Elliot Wilbur with Needham & Company..

Good morning, Elliot..

Hey, Fred, how are you?.

Good..

Maybe, I could just follow-up on Gregg’s question, ask you a little bit more specifically around acquisition opportunities.

I know you’ve expressed a strong desire in the past to build up the branded business and most preferential course would be existing branded assets, but there is a couple large generic properties now that are suggested or rumored to be for sale.

So I’m just wondering how you are particularly thinking about the potentially balancing the two sides of the model here in terms of the opportunities that are out there?.

The work capacity do both. I think the -- I mean with the difficulty that we had is it’s hard to find a brand company that would be a nice bolt-on for us. And that’s primarily because many of the early assets are always valued much higher than they probably are worth so.

And they come with some baggage that probably would not be prepared to take into the organization at this time. So I would anticipate that you will see us buy brand products and it was said that many times. But there -- you are right there are some significant and some smaller generics assets that are known to be available, I mean in companies.

And there are others that we’re in discussions with management on..

Okay. And then if I could just ask two specific product questions as well. The first one is on Digoxin. There has been some new competition in the market there with the Mylan’s re-launch and also have heard from trade sources that Sun via Caraco may be re-launching in that market.

And then I know when your competitors talked about some API issues as well.

So maybe if you could just provide a little bit of color on the current dynamics in that that key product, and then a follow-up with Adderall XR anything that you can say there with regard to your application? Obviously, the Hayward issues are the big overhang, but anything kind of under the surface that could inject some more confidence that this could remain a revenue stream for you kind of in the '16 period and beyond?.

Sure. So obviously there is a key focus. Digoxin is a product that you would have anticipated competition would reestablish itself with a different price point. There is an opportunity for people to come back in. We have been aware of the supply -- potential supply problem for years and have showed ourselves up.

And I think we stated, we have several years of API supply locked and loaded so that we were in a comfortable position there. We have seen at least one new player come back into the marketplace not taking great share today, but we can anticipate there will probably be some evolution of that.

We have heard the same rumors of additional competition coming, although we've not seen them in the marketplace yet. But we do anticipate and our model expects that there will be competition and potentially some price erosion on that product. Regarding AXR or Adderall, as we've said, we have product supply that takes us through 2015.

We are looking at ways to extend that potentially little farther into '16 so that we get a nice overlap between the supply we have and any delays in the potential approval. We still are anticipating that our product will be approved, so that there will be not a gap in supply.

But you are right we are reliant on this, the application is going smoothly and FDA coming in and allowing Hayward to have approvals. And actually then third thing is getting it at the top of the list of the products that they look at during PAI inspection. So there is a serious things that do need to happen, but we are managing those.

It’s part of the reason why we reduced the number of ANDAs so that we could allow the agency to focus on those that are critical to us..

Okay. And just one last question if I may for yourself or Bryan.

Any comments that you could make around the performance, the core pharma business at year-end post you’re the commentary provided when you announced the acquisition and I guess specifically and looking at some of the documents that have been provided as part of the -- or provided to lenders.

Certainly on the topline basis, the performance of that business was quite a bit stronger or analyzing that quite a bit higher run rate than what you had talked about previously, even though the EBITDA metrics look to be roughly in line.

So it seemed like it was performing quite a bit better than the numbers that you had talked about the time you announced the deal? Thanks..

Yeah. I think we actually said that was -- that was my script statement the topline was stronger, the EBITDA was at the lower end of what we guided..

You just stopped talking..

Yeah. Then I guess maybe you should come on this side and help us..

Good answer..

Actually I think the way to look at this is we gave guidance on what we thought we would do with the transaction and there is nothing that we’ve seen in their performance that would make us move it up or down. I think we are right in that appropriate range.

We are looking forward to getting on the other side of the close because I think what these products need that they've got to improve on as a little stronger commercial effort, and a more integrated commercial effort and our teams are getting ready to do that and do all the planning they can do, while we are still operating the two companies.

But, I think, our folks are chomping at the bit to participate in the number of launches that are going on right now..

All right. Thank you..

Your next question comes from the line of Gary Nachman with Goldman Sachs..

Fred, just a follow up on that last point on CorePharma, to get to your $0.90 accretion estimate from that deal, what sort of revenue growth are you actually assuming in 2015? And how much of that is from new generic launches and how many of those have you already gotten approved, that you feel….

Yeah. So we are going to do guidance as soon as we have -- the transaction of [Eyesight] [ph], so we know exactly when we are going to be closing on things. I think that’s a more appropriate time. But at J. P. Morgan we did outlined where we think the launches will come from.

I think, seven out of Core, there were six out of existing partnerships between us and Core, and then five out of Impax itself, which only three of those are really held up by the warning letter. So we’ve get a whole series of launches here. Last year 2014 Core did received the total of seven approvals. Two of them in February related to PAI.

Two in August related to direct PAI inspection and then three more that subsequently came on non-inspection approvals, so one in October, one November, one in December. They have launched about half of those and they are in a process of planning for the other half of those.

So we would very much like to be involved in those launches and I think that our timing is probably right for us to be involved in those. So but I think better guidance will after we are able to give the full year guidance of the combined company..

Okay.

And then, I know, no official updates on Hayward, but any sense if the FDA will definitely need to come back and re-inspect at some point, I am assuming the answer is, yes, just want to confirm that? And are you comfortable saying this could potentially get resolved sometime this year? And then just also on the Fenofibrate, just comment how you see the competitive landscape there, that’s an important contributor to your topline? Thanks..

Yes. Sure. So FDA, I mean, I think, we have said, we anticipate that they will come back in, what they come back and then do, we are not sure. We are preparing for them to come in and do a full inspection. That could be, however, a modified GMP inspection, could go right to a PAI. It could be a combination of the two. We just don’t know.

We are just using the time we have right now to get up better and better every single day. Make sure that we have our PAI readiness program completed and we reviewed and make sure the facility looks perfect as they come. So don’t know but we are preparing for the largest level of inspection that could happen.

We are as always hopeful that gets resolved as soon as possible in 2015, seems like a timeframe that we should be there. On Fenofibrate, obviously, there is competition there. We do anticipate that there will be additional competition through the year. I think we actually anticipate there will be additional competition in 2014 that did not occur.

So as we look out in the landscape, we would -- we are assuming and modeling as competition is coming we are preparing for that. But the upside will be if, in fact, there is no competition to go through 2015 without additional capacity..

Okay. Thank you..

[Operator Instructions] Your next question comes from line of Jason Gerberry with Leerink Partners..

Hi. Good morning..

Hi..

Couple questions.

First, just on RYTARY, can you talk a little bit about, you mentioned a $15 to $17 list price, what should we be thinking about in terms of gross to net adjustment to get into your effective net price after thinking about the rebates in deductions? And then second question on the, as you think about the Impax standalone business absorbing roughly a $50 million SG&A, year-on-year step up.

Do you see the business on net income being relatively flat or actually growing in 2015 as you think about Impax standalone? And the last question is on Adderall XR, a little confused, but do you have inventory to carry yourself to a meaningful portion of 2016? If you don't get an approval or is it largely just through ‘15 and then you run out of inventory? Thanks..

Okay. We are going to do the standalone when we do guidance as we’re closer to close. I think that’d be more meaningful and we’d be able to put full picture together.

On RYTARY, gross to net, we actually have never disclosed that primarily because that was a part of the negotiations we’re having right now with the third-party players on what different rebase we get for the different positions on either tier 2, tier 3 or non-step edit.

So I think that’s been -- but I think we’re going to anticipate, so look like a standard specialty pharma..

Yeah.

I think fairly typical for what you project for other products?.

And with Adderall XR, I mean, look the competition is going to define a bit -- how long into ‘16 we go. We’ve got product supply that takes us through ‘15. We’ve always described that. We’ve never got much further on the description of that and probably more for competitive reasons. So we feel comfortable with our position in ‘15.

We are anxious to get our ANDA approved and hope that the transition goes very smoothly..

Okay. Great. Thanks a lot..

Your next question comes from the line of Michael Faerm with Wells Fargo..

Thanks for taking the questions. I have two, the first one on M&A. You’ve talked about 1.5 times that leverage ratio.

How high would you be willing to take that for the RYT deal and would you be willing to use stock at current prices and also would you accept any near-term dilution for the RYT long-term deal?.

Yeah. I think we’ve looked at -- I will answer the last one first. We’ve looked at all of the funding opportunities that we would have or funding vehicles that we would have for closing the transactions.

We haven’t found anything yet that would require to go to stock with the exception if we had -- if there is an inversion opportunity that could come along and obviously that would require stock.

On -- I can’t remember the first question was?.

High leverage?.

High leverage. I’m sorry. Yes, so for me the key has always been what the leverage position is when you close it, how quickly you can delever. So the company is throwing off -- the combined company would throw off its substantial amount of cash.

The models have been used its millions tons out there where you could leverage theoretically up to the high fours, low fives as long as you come back down pretty quickly. That’s a similar model that we’ll use. I think you’ll see that in this one is that we’ll close at 1.5 range.

And if we don’t do anything else, we’ll be well down below that almost by the end of the year. And so I would think we are in optimal position to keep going. We don’t really have a marker. We haven’t put something out there that said we wouldn’t go higher than four -- wouldn’t go higher than five.

I think it really depends on the transaction and how quickly you can delever..

And my other question is about G&A spending. Understanding the comments about some of the fourth quarter and on recurring items, it looks like the non-GAAP G&A for the full year was up about 38% year-over-year. It was up 25% to 40% in the first three quarters.

Can you just elaborate on why that’s been consistently going up year-over-year and how you expect that trajectory to look going forward?.

Yes. I mean, I’ll try to give some color on that. If you look at our non-GAAP items, we did have significant activities around M&A and business development. That was our single biggest item. And yeah that as we consider this one-time but as we do additional M&A activity….

It maybe….

It might come back. And then like I said, during the year on the brand side, we put more advertising push behind Zomig. And we saw that was a good investment as you saw Zomig nasal spray really perform well. And then in Q4, we spend a lot of effort towards getting ready to launch RYTARY properly. And all that just caused the trending of SG&A to go up..

My comments around G&A, do those items are G&A or sales and marketing?.

Everything except the last comment was around G&A..

Yeah..

Sorry. I pulled in sales but everything except the last item..

Look there is some additional personnel that are going into our QSC program that gets caught into the G&A line also. We are at the point where we’ve very efficiently attempting to move from a consultant-based driven approach to which we have excluded to employee base because we’ve got to own this whole process.

And as you do that, you do expand some of your personnel base..

And then one other item that we spend on was IT work around, especially on QIP that’s going through G&A, that’s not capitalized full-time costs..

Great. Thank you..

Your next question comes from the line of Marc Goodman with UBS..

Good morning, Mark..

Good morning. If you just think about the base generics business and you eliminate RENVELA from the past two quarters, was there any major changes in any other products as far as revenues from third quarter to fourth quarter? And then if you think about the gross margin you just eliminate that, obviously was a big help for the past two quarters.

Can you just eliminate that? Was there anything underlying in the gross margin, the change, anything going on there?.

I mean, one of the things that’s unique about this organization is that we've got a whole series of key products that have been incredibly stable over the last three, four, five quarters. We did launch a couple of small things like Ursodiol that added to the equation. We've got a reasonable share position we’ve gained there.

There is a couple of other little things that we've taken, some small price and some share opportunities on. But I think being reasonably stable in that environment is a pretty good spot to be at. So not a whole lot of changes, I think we clearly identified it.

What I like is it’s set up for ‘15 because in ’15, it allows us to kind of unleash some of these launches.

Some will be big, some will be small but it’s a series of new launches that will put some new opportunities in our hand and they're coming from ourselves, from core and from our partner arrangements that have been established over the last couple of years..

And WELCHOL, where we are on that?.

Yeah. So, WELCHOL is, we are still adjudicating that ANDA, as you know that, that’s one that’s probably trapped by FDA right now. We are -- I think as important I will say, we are burning off our exclusivity period right now. As you know in the settlement arrangement, we have exclusivity until April 2. So, we've just got another month left to go.

The agency -- we anticipate the agency will have to come in and approve that product in a PA inspection. And as we’ve said, there are not there. So, I think this is going to be an interesting one to see what happens post exclusivity expiring.

WELCHOL and RENVELA will look very much like a similar saga, where opportunities for launch may come and go and we may not see a generic out there. Our goal is to try to be at the first waive now where one products come..

Thanks..

Your next question comes from the line of Shibani Malhotra with Sterne, Agee..

Good morning, Shibani..

Hi. This is Austin Nelson for Shibani,.

Still I like Shibani..

We actually had a question on Ursodiol. So one of your competitors who is actually in the capsule market have made some comments about the pricing dynamics, which I guess just began back in the spring. And we noticed that core actually has the capsule when you recently launched the tablet.

So, I guess the first question is when we fold in core, was that pricing dynamic considered in the overall guidance or could that the upside if we continue to see the capsule pricing dynamic play out? And then for your tablet with less competition in the tablet market and no pricing dynamic having occurred there yet, is that a potential opportunity as you think about the on-market portfolio?.

So, I think there is probably too out of bounds there that we are not going to talk about. We don't generally talk about pricing on individual products in the form like this and secondly, we don’t have any transparency of stuff what you can see in the market on what the core pricing is.

There is a couple of things that you cannot be working with as you head towards the transaction closed and that’s what the R&D portfolio looks like and managing anything related to the commercial aspect, so it’s just pricing. So, I don’t really have -- I'd love to give you some color on it but I really can’t..

Okay. We understand. Thank you..

Your final question comes from the line of Elliot Wilbur with Needham & Company..

Thanks for taking the follow-up. Just two quick product specific questions related to the core pharma business and Fred, first on Albenza. I know you talked about a lot of defense strategies around that asset that will probably be disclosed at a later point.

But just wanted to maybe hear from you once gain, sort of how quickly you could implement those, if in fact you were able hit with the supplies generic and just sort of what the visibility level is that you could actually have in terms of whether or not there may be an application out there or product out there? And then the second was around the Adrenaclick product obviously that looks on paper to be a big opportunity, and you’ve talked about why you think that can be a key asset going forward.

Just wondering if there is potentially some way to leverage that asset or technology and look at also potentially introducing an AB-rated generic version of EpiPen?.

Yeah. So, both of those questions are probably better after close. We have obviously taken and watched the market conditions around both Albenza and Adrenaclick. If both of those we are very anxious to get our hands on and be able to apply some of the resources and the capabilities that we have on our side to the mix.

I think as you’ve seen core has had some outward projections that they would like to get a sales organization involved in both of these to assist in the development they don’t have that, we do.

So I think this is one that we would like to be on the other side so that we could start actually evaluating and implementing some of the strategies that are in play. Beyond that, I mean, look the market has done a wonderful job with the EpiPen marketplace.

We are looking to participate in that marketplace and we think it’s large enough that there is room for us and we just think that some of the core competencies we have will be valuable there. On Albenza, we have not seen any noise on another generic doesn’t mean it’s not -- there isn’t one coming now.

And it’s about the speed of implementing a life cycle, at least the first phase of the life cycle management program. Again, this is one that is probably better talked about when we get to the other side of close..

Okay. Thank you, Elliot. Thank you all for joining us today. We will be presenting at the Cowen and Company conference on Monday, March 2nd at 4 PM Eastern Time. We invite you to listen to our presentation. Please give us a call, if you have any questions on today’s results. Thank you. And that concludes our call..

Thank you, ladies and gentlemen. You may now disconnect..